Honda Motor(US:HMC) Zhong Guo Jing Ying Bao·2025-05-20 21:40Core Viewpoint - Honda has announced a significant reduction in its electrification investment plan, cutting the total investment from 10 trillion yen (approximately 499.67 billion RMB) to 7 trillion yen (approximately 349.78 billion RMB) due to a slowdown in the electric vehicle market [1][2]. Investment Strategy - The company will pause its investment plan for a large electric vehicle and battery production facility in Ontario, Canada, which was estimated at around 150 billion yen (approximately 14.99 billion RMB) [2]. - Honda's new strategy aims to increase total vehicle sales to over 3.6 million units by 2030, with a target of 2.2 million hybrid vehicles [1]. Market Positioning - Honda expects that by 2030, the global sales proportion of electric vehicles will drop to around 20%, down from the previously set target of 30% [1]. - The company plans to enhance its hybrid vehicle lineup, positioning hybrids as a key power system during the transition to electric vehicles [1]. Product Development - Starting in 2027, Honda plans to launch 13 next-generation hybrid models over four years while maintaining its commitment to battery electric vehicles (BEVs) as a core pillar post-2030 [3]. - The company aims to improve the fuel economy of its next-generation e:HEV hybrid systems by over 10% and reduce the cost of hybrid systems by more than 50% compared to models launched in 2018 [3]. Supply Chain and Production - Honda is implementing a flexible supply chain strategy to adapt to market fluctuations and government policy changes, allowing for simultaneous production of electric and hybrid vehicles [4][5]. - The company is focusing on optimizing supply capabilities and configurations to ensure a stable supply of electrification components, particularly batteries [5]. Financial Performance - For the fiscal year 2024, Honda reported a 6.2% increase in sales revenue to 21.69 trillion yen (approximately 1,086.28 billion RMB), but a 12.2% decline in operating profit to 1.21 trillion yen (approximately 60.59 billion RMB) and a 24.5% drop in net profit to 835.8 billion yen (approximately 41.86 billion RMB) [6]. - The decline in net profit is attributed to a decrease in sales in the Chinese market and increased R&D expenses [6]. Challenges and Future Outlook - Honda anticipates facing approximately 650 billion yen (approximately 32.52 billion RMB) in tariff costs for the fiscal year 2025, which could significantly impact profitability [7]. - The company plans to mitigate tariff impacts by reducing costs and shifting more production to the U.S., while also enhancing collaboration with suppliers for cost optimization [7]. - In response to declining demand for fuel vehicles and competitive disadvantages in the electric vehicle sector, Honda will implement promotional activities in China and increase local investments by 20% in fiscal year 2025 [8][10].